Question

The American Association of Individual Investors (AAII) On-Line Discount Broker Survey polls members on their experiences with electronic trades handled by discount brokers. As part of the survey, members were asked to rate their satisfaction with the trade price and the speed of execution, as well as provide an overall satisfaction rating. Possible responses (scores) were no opinion (0), unsatisfied (1), somewhat satisfied (2), satisfied (3), and very satisfied (4). For each broker, summary scores were computed by computing a weighted average of the scores provided by each respondent. A portion the survey results follow (AAII website, February 7, 2012). Brokerage Satisfaction with Trade Price Satisfaction with Speed of Execution Overall Satisfaction with Electronic Trades Scottrade, Inc. 3.2 3.1 3.2 Charles Schwab 3.3 3.1 3.2 Fidelity Brokerage Services 3.1 3.3 4.0 TD Ameritrade 2.8 3.5 3.7 E*Trade Financial 2.9 3.2 3.0 (Not listed) 2.4 3.2 2.7 Vanguard Brokerage Services 2.7 3.8 2.7 USAA Brokerage Services 2.4 3.7 3.4 Thinkorswim 2.6 2.6 2.7 Wells Fargo Investments 2.3 2.7 2.3 Interactive Brokers 3.7 3.9 4.0 Zecco.com 2.5 2.5 2.5 Firstrade Securities 3.0 3.0 3.0 Banc of America Investment Services 1.0 4.0 2.0 (a) Develop an estimated regression equation using trade price and speed of execution to predict overall satisfaction with the broker. Let x1 represent satisfaction with Trade Price. Let x2 represent satisfaction with speed of execution. If required, round your answers to four decimal places. For subtractive or negative numbers use a minus sign even if there is a + sign before the blank. (Example: -300) = + x1 + x2 What is the coefficient of determination? If required, round your answers to four decimal places. Interpret the coefficient of determination. The input in the box below will not be graded, but may be reviewed and considered by your instructor. % of satisfaction with electronic traders is explained with speed and and price. 29.16% is not explained by speed and price. (b) Use the t test to determine the significance of each independent variable. What are your conclusions at the 0.05 level of significance? The input in the box below will not be graded, but may be reviewed and considered by your instructor. speed of execution is significant variable for predicting the overall satisfaction with electronic traders. (c) Interpret the estimated regression parameters. Are the relationships indicated by these estimates what you would expect? The input in the box below will not be graded, but may be reviewed and considered by your instructor. trade price: if one unit increases, overall satisfaction will increase by units speed of execution: if one unit increases, overall satisfaction will increase by units (d) Finger Lakes Investments has developed a new electronic trading system and would like to predict overall customer satisfaction assuming they can provide satisfactory levels of service levels (2) for both trade price and speed of execution. Use the estimated regression equation developed in part (a) to predict overall satisfaction level for Lakes Investments if they can achieve these performance levels. If required, round your answer to one decimal places. Do not round intermediate calculations. (e) What concerns (if any) do you have with regard to the possible responses the respondents could select on the survey? The input in the box below will not be graded, but may be reviewed and considered by your instructor. blan

Answer 1